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26 July, 11:18

You receive $1,200 today, $2,200 in one year, and $3,300 in two years. If you deposit these cash flows in an account earning 12%, how much money is in the account three years from now?

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  1. 26 July, 13:29
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    The amount of money that is in the account three years from now is $8,142.

    Explanation:

    Future Value of $1200

    FV = PV (1 + r) n

    = 1200 * (1 + 12%) ^3

    = $1685.91

    Future Value of $2200

    FV = PV (1 + r) n

    = 2200 * (1 + 12%) ^2

    = $2759.68

    Future Value of $3300

    FV = PV (1 + r) n

    = 3300 * (1 + 12%) ^1

    = $3696.00

    Total Future Value = $1685.91 + $2759.68 + $3696.00

    = $8142

    Therefore, The amount of money that is in the account three years from now is $8,142.
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